It is January 2019 and you have just been hired as the Chief Financial Officer for Chen and Sons Inc., a diversified corporation that has just finished a very fast-paced, dynamic year. Your predecessor left the firm in a hurry. Your primary responsibility is to finish the years balance sheet and income statement.

Specifically, you must prepare and present the following.

1. Record any necessary adjusting journal entries, including making any appropriate adjustments if you conclude that there are errors in various parts of your predecessors work. Add any accounts necessary. Please make sure that you include detailed calculation schedules and any explanation to help understand your adjusting journal entries. Note that the unadjusted trial balance is provided on the next page, showing non-zero balance accounts.
2. Prepare the Trial Balance Worksheet (includes unadjusted trial balance, adjusted trial balance, and final trial balance);
3. Prepare a complete Multi-step Income Statement for the year ended December 31, 2018;
4. Prepare a Balance Sheet for the year ended December 31, 2018.

Unadjusted Trial Balances at the end of 2018

Chen and Sons	Unadjusted Trial Balance
	31-Dec	2018
	debit	credit
Cash	5,080,000
Accounts Receivable	12,000,000
Allowance for Bad debt		20,000
Inventory	17,500,000
Purchases	91,740,000
Construction in Progress Inventory	20,500,000
Billings on Contract		19,000,000
PP&E	48,000,000
Accum Depr		24,000,000
Assets held for sale	1,500,000
Accounts Payable		18,000,000
Common Stock		1,500,000
Retained Earnings		33,280,000
Sales		150,000,000
Sales Returns	105,000
Ninja Revenue		2,500,000
SafetyFirst Revenue		5,000,000
Cost of Ninja	2,125,000
Cost of Software-SafetyFirst	3,000,000
General and Admin	51,750,000
TOTAL	253,300,000	253,300,000

Sales and revenue information:

1. Chen and Sons main operation is the sole distributer of the products of GalaxyWars that includes toys, stationary, and children clothes etc. Its related sales do not have special label on unadjusted trial balances (that is, Sales and Sales Returns).

2. In addition to its main operations, in October 2018 Chen and Sons launched a new service through its website (labeled with Ninja on the unadjusted trial balances). Ninja offers online fitness training through contracted independent trainers. Each trainer sets her own price for a training session. Chen and Sons connects interested individuals with the trainers but does not directly provide any of the training. For its services and per the contract, Chen and Sons is entitled to 15% of the total per session fee. Chen and Sons records the entire fee collected from the session as revenue and recognizes its cost associated with Ninja as 85% of the collected fee.

c. Also, in addition to its main operations, Chen and sons' management entered into a an agreement on September 1, 2018 to supply its internally developed home monitoring system, SafetyFirst, and maintenance support to a regional 24 hour fitness chain. The details of the agreement calls for Chen and Sons to be paid $5,000,000 up front for the equipment and 3 years of maintenance support (beginning on agreement date). The fitness chain could have bought just the equipment for $6,000,000 with no support and they could have independently contracted for the maintenance support for $2,000,000 for the three year period. The cost of the equipment sold was $3,000,000 and Chen and Sons has recorded the $5,000,000 as a point-of-sale transaction.

4. Finally, in addition to its main operations, Chen and Sons also has a division that builds theme parks. At the end of 2017, there was one building project in process, the $30,000,000 StarKingdom project (SK), which was started in June 2017. The original estimated costs for the SK project totaled $28,000,000 in 2017 but there have been substantial increases in the cost of materials resulting in a current total cost estimate of $28,500,000 for the job in 2018. The contract does not allow for renegotiation of the contracted price. Chen and Sons has a legally binding enforceable contract with both universities and all parties are expected to be able to perform under the contracts. The general ledger account Construction-in-Progress Inventory shows the following before any 2018 year-end adjusting entries.

5. Construction-in-Progress Inventory						Billings-on-Contract
   2017		9,800,000				2017		10,000,000
   2017	Adj JE	700,000				2018		9,000,000
   2018		10,000,000
   		20,500,000						19,000,000